Leveraging our employee Engagement Survey and insights and benchmarks from industry experts, we launched our Inclusion Index to better understand the factors that drive inclusion and our employees’ sense of belonging across the organization. The Index helps us identify gaps and opportunities to build upon our strengths around inclusion. Our leaders are committed to implementing solutions to foster an inclusive and diverse workplace that aligns with the Corporation’s mission, values, goals, and business practices. Leveraging our employee Engagement Survey and insights and benchmarks from industry experts, we launched our Inclusion Index to better understand the factors that drive inclusion and our employees’ sense of belonging across the organization. The Index helps us identify gaps and opportunities to build upon our strengths around inclusion. Our leaders are committed to implementing solutions to foster an inclusive and diverse workplace that aligns with the Corporation’s mission, values, goals, and business practices. Available InformationAvailable InformationThrough the Corporation’s website at www.northerntrust.com, the Corporation makes available free of charge its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all other reports and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), as soon as reasonably practicable after it files such material with, or furnishes such material to, the SEC. The contents of the Corporation’s website, the website of the SEC or any other website referenced herein are not a part of this Annual Report on Form 10-K.Through the Corporation’s website at www.northerntrust.com, the Corporation makes available free of charge its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all other reports and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), as soon as reasonably practicable after it files such material with, or furnishes such material to, the SEC. The contents of the Corporation’s website, the website of the SEC or any other website referenced herein are not a part of this Annual Report on Form 10-K.ITEM 1A - RISK FACTORSITEM 1A - RISK FACTORSIn the normal course of our business activities, we are exposed to a variety of risks. The following discussion sets forth the risk factors that we have identified as being most significant to Northern Trust. Although we discuss these risk factors primarily in the context of their potential effects on our business, financial condition or results of operations, you should understand that these effects can have further negative implications such as: reducing the price of our common stock and other securities; reducing our capital, which can have regulatory and other consequences; affecting the confidence that clients, counterparties and/or applicable regulators have in us, with a resulting negative effect on our ability to conduct and grow our businesses; and reducing the attractiveness of our securities to rating agencies and potential purchasers, which may affect adversely our ability to raise capital and secure other funding or the cost at which we are able to do so. Additional risks beyond those discussed below, elsewhere in this Annual Report on Form 10-K or in other of our reports filed with, or furnished to, the SEC also could affect us adversely. Further, we cannot assure you that the risk factors herein or elsewhere in our other reports address all potential risks that we may face and you should not interpret discussion of any risk to imply that such risk has not already materialized.In the normal course of our business activities, we are exposed to a variety of risks. The following discussion sets forth the risk factors that we have identified as being most significant to Northern Trust. Although we discuss these risk factors primarily in the context of their potential effects on our business, financial condition or results of operations, you should understand that these effects can have further negative implications such as: reducing the price of our common stock and other securities; reducing our capital, which can have regulatory and other consequences; affecting the confidence that clients, counterparties and/or applicable regulators have in us, with a resulting negative effect on our ability to conduct and grow our businesses; and reducing the attractiveness of our securities to rating agencies and potential purchasers, which may affect adversely our ability to raise capital and secure other funding or the cost at which we are able to do so. Additional risks beyond those discussed below, elsewhere in this Annual Report on Form 10-K or in other of our reports filed with, or furnished to, the SEC also could affect us adversely. Further, we cannot assure you that the risk factors herein or elsewhere in our other reports address all potential risks that we may face and you should not interpret discussion of any risk to imply that such risk has not already materialized.These risk factors also serve to describe factors which may cause our results to differ materially from those described in forward-looking statements included herein or in other of our reports or statements that make reference to this Annual Report on Form 10-K. Forward-looking statements and other factors that may affect future results are discussed under “Forward-Looking Statements” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”These risk factors also serve to describe factors which may cause our results to differ materially from those described in forward-looking statements included herein or in other of our reports or statements that make reference to this Annual Report on Form 10-K. Forward-looking statements and other factors that may affect future results are discussed under “Forward-Looking Statements” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”14 2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 14 2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 14 2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 14 2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 14 2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 14 2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION SummarySummaryOur business, financial condition or results of operations may be materially and adversely affected by various risk types and considerations, including market risks, operational risks, credit risks, liquidity risks, regulatory and legal risks, strategic risks, and other risks, including as a result of the following:Our business, financial condition or results of operations may be materially and adversely affected by various risk types and considerations, including market risks, operational risks, credit risks, liquidity risks, regulatory and legal risks, strategic risks, and other risks, including as a result of the following:Market RisksMarket Risks•We are dependent on fee-based business for a majority of our revenues, which may be affected adversely by market volatility, a downturn in economic conditions, underperformance and/or negative trends in investment preferences.•We are dependent on fee-based business for a majority of our revenues, which may be affected adversely by market volatility, a downturn in economic conditions, underperformance and/or negative trends in investment preferences.•Changes in interest rates can affect our earnings negatively.•Changes in interest rates can affect our earnings negatively.•Changes in the monetary, trade and other policies of various regulatory authorities, central banks, governments and international agencies may reduce our earnings and affect our growth prospects negatively.•Changes in the monetary, trade and other policies of various regulatory authorities, central banks, governments and international agencies may reduce our earnings and affect our growth prospects negatively.•Macroeconomic conditions and uncertainty in the global economy, including the financial stability of various regions or countries across the globe, including the risk of defaults on sovereign debt and related stresses on financial markets, could have a significant adverse effect on our earnings.•Macroeconomic conditions and uncertainty in the global economy, including the financial stability of various regions or countries across the globe, including the risk of defaults on sovereign debt and related stresses on financial markets, could have a significant adverse effect on our earnings.•Declines in the value of securities held in our investment portfolio can affect us negatively.•Declines in the value of securities held in our investment portfolio can affect us negatively.•Volatility levels and fluctuations in foreign currency exchange rates may affect our earnings.•Volatility levels and fluctuations in foreign currency exchange rates may affect our earnings.•Changes in a number of particular market conditions can affect our earnings negatively.•Changes in a number of particular market conditions can affect our earnings negatively.Operational RisksOperational Risks•Many types of operational risks can affect our earnings negatively.•Many types of operational risks can affect our earnings negatively.•We are highly dependent on information technology systems, and networks, many of which are operated by third parties, and any failures of, or disruptions to, our or such third parties’ technological systems or networks could materially and adversely affect our business.•We are highly dependent on information technology systems, and networks, many of which are operated by third parties, and any failures of, or disruptions to, our or such third parties’ technological systems or networks could materially and adversely affect our business.•Breaches of our security measures, including, but not limited to, those resulting from cyber-attacks, or other information security incidents may result in losses.•Breaches of our security measures, including, but not limited to, those resulting from cyber-attacks, or other information security incidents may result in losses.•Errors, breakdowns in controls or other mistakes in the provision of services to clients or in carrying out transactions for our own account can subject us to liability, result in losses or have a negative effect on our earnings in other ways.•Errors, breakdowns in controls or other mistakes in the provision of services to clients or in carrying out transactions for our own account can subject us to liability, result in losses or have a negative effect on our earnings in other ways.•Our dependence on technology, and the need to update frequently our technology infrastructure, exposes us to risks that also can result in losses.•Our dependence on technology, and the need to update frequently our technology infrastructure, exposes us to risks that also can result in losses.•A failure or circumvention of our controls and procedures could have a material adverse effect on our business, financial condition and results of operations.•A failure or circumvention of our controls and procedures could have a material adverse effect on our business, financial condition and results of operations.•Failure of any of our third-party vendors (or their vendors) to perform can result in losses.•Failure of any of our third-party vendors (or their vendors) to perform can result in losses.•We are subject to certain risks inherent in operating globally which may affect our business adversely.•We are subject to certain risks inherent in operating globally which may affect our business adversely.•Failure to control our costs and expenses adequately could affect our earnings negatively.•Failure to control our costs and expenses adequately could affect our earnings negatively.•Pandemics, natural disasters, global climate change, acts of terrorism, geopolitical tensions, and global conflicts may have a negative impact on our business and operations.•Pandemics, natural disasters, global climate change, acts of terrorism, geopolitical tensions, and global conflicts may have a negative impact on our business and operations.Credit RisksCredit Risks•Failure to evaluate accurately the prospects for repayment when we extend credit or maintain an adequate allowance for credit losses can result in losses or the need to make additional provisions for credit losses, both of which reduce our earnings.•Failure to evaluate accurately the prospects for repayment when we extend credit or maintain an adequate allowance for credit losses can result in losses or the need to make additional provisions for credit losses, both of which reduce our earnings.•Market volatility and/or weak economic conditions can result in losses or the need for additional provisions for credit losses, both of which reduce our earnings.•Market volatility and/or weak economic conditions can result in losses or the need for additional provisions for credit losses, both of which reduce our earnings.•The failure or perceived weakness of any of our significant counterparties could expose us to loss.•The failure or perceived weakness of any of our significant counterparties could expose us to loss.Liquidity RisksLiquidity Risks•If we do not manage our liquidity effectively, our business could suffer.•If we do not manage our liquidity effectively, our business could suffer.•If the Bank is unable to supply the Corporation with funds over time, the Corporation could be unable to meet its various obligations.•If the Bank is unable to supply the Corporation with funds over time, the Corporation could be unable to meet its various obligations.•We may need to raise additional capital in the future, which may not be available to us or may only be available on unfavorable terms.•We may need to raise additional capital in the future, which may not be available to us or may only be available on unfavorable terms.•Any downgrades in our credit ratings, or an actual or perceived reduction in our financial strength, could affect our borrowing costs, capital costs and liquidity adversely.•Any downgrades in our credit ratings, or an actual or perceived reduction in our financial strength, could affect our borrowing costs, capital costs and liquidity adversely.2023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 152023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 152023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 152023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 152023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 152023 ANNUAL REPORT | NORTHERN TRUST CORPORATION 15Regulatory and Legal RisksRegulatory and Legal Risks•Failure to comply with regulations and/or supervisory expectations can result in penalties and regulatory constraints that restrict our ability to grow or even conduct our business, or that reduce earnings.•Failure to comply with regulations and/or supervisory expectations can result in penalties and regulatory constraints that restrict our ability to grow or even conduct our business, or that reduce earnings.•We are subject to extensive and evolving government regulation and supervision that impacts our operations. Changes by the U.S. and other governments to laws, regulations and policies applicable to the financial services industry may heighten the challenges we face and make regulatory compliance more difficult and costly.•We are subject to extensive and evolving government regulation and supervision that impacts our operations. Changes by the U.S. and other governments to laws, regulations and policies applicable to the financial services industry may heighten the challenges we face and make regulatory compliance more difficult and costly.•We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which could increase the cost of doing business, compliance risks and potential liability.•We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which could increase the cost of doing business, compliance risks and potential liability.•We may be impacted adversely by claims or litigation, including claims or litigation relating to our fiduciary responsibilities.•We may be impacted adversely by claims or litigation, including claims or litigation relating to our fiduciary responsibilities.•We may be impacted adversely by supervisory and/or regulatory enforcement matters.•We may be impacted adversely by supervisory and/or regulatory enforcement matters.•We may fail to set aside adequate reserves for, or otherwise underestimate our liability relating to, pending and threatened claims, with a negative effect on our earnings.•We may fail to set aside adequate reserves for, or otherwise underestimate our liability relating to, pending and threatened claims, with a negative effect on our earnings.•The ultimate impact on us of regulatory divergence between the United Kingdom and the European Union remains uncertain.•The ultimate impact on us of regulatory divergence between the United Kingdom and the European Union remains uncertain.•If we fail to comply with legal standards, we could incur liability to our clients or lose clients, which could affect our earnings negatively.•If we fail to comply with legal standards, we could incur liability to our clients or lose clients, which could affect our earnings negatively.Strategic RisksStrategic Risks•If we are not able to attract, retain and motivate personnel, our business could be negatively affected.•If we are not able to attract, retain and motivate personnel, our business could be negatively affected.•If we do not develop and execute strategic plans successfully, our growth may be impacted negatively.•If we do not develop and execute strategic plans successfully, our growth may be impacted negatively.•We are subject to intense competition in all aspects of our businesses, which could have a negative effect on our ability to maintain satisfactory prices and grow our earnings.•We are subject to intense competition in all aspects of our businesses, which could have a negative effect on our ability to maintain satisfactory prices and grow our earnings.•Damage to our reputation could have a direct and negative effect on our ability to compete, grow and generate revenue.•Damage to our reputation could have a direct and negative effect on our ability to compete, grow and generate revenue.•We need to invest in innovation constantly, and the inability or failure to do so may affect our businesses and earnings negatively.•We need to invest in innovation constantly, and the inability or failure to do so may affect our businesses and earnings negatively.•Failure to understand or appreciate fully the risks associated with development or delivery of new product and service offerings may affect our businesses and earnings negatively.•Failure to understand or appreciate fully the risks associated with development or delivery of new product and service offerings may affect our businesses and earnings negatively.•Our success with large, complex clients requires an understanding of the market and legal, regulatory and accounting standards in various jurisdictions.•Our success with large, complex clients requires an understanding of the market and legal, regulatory and accounting standards in various jurisdictions.•We may take actions to maintain client satisfaction that result in losses or reduced earnings.•We may take actions to maintain client satisfaction that result in losses or reduced earnings.Other RisksOther Risks•The systems and models we employ to analyze, monitor and mitigate risks, as well as for other business purposes, are inherently limited, may not be effective in all cases and, in any case, cannot eliminate all risks that we face.•The systems and models we employ to analyze, monitor and mitigate risks, as well as for other business purposes, are inherently limited, may not be effective in all cases and, in any case, cannot eliminate all risks that we face.•Changes in tax laws and interpretations and challenges to our tax positions may affect our earnings negatively.•Changes in tax laws and interpretations and challenges to our tax positions may affect our earnings negatively.•Changes in accounting standards may be difficult to predict and could have a material impact on our consolidated financial statements.•Changes in accounting standards may be difficult to predict and could have a material impact on our consolidated financial statements.•Our ability to return capital to stockholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, applicable provisions of Delaware law, or our failure to pay full and timely dividends on our preferred stock and the terms of our outstanding debt.•Our ability to return capital to stockholders is subject to the discretion of our Board of Directors and may be limited by U.S. banking laws and regulations, applicable provisions of Delaware law, or our failure to pay full and timely dividends on our preferred stock and the terms of our outstanding debt.Holders of our common stock are entitled to receive only such dividends and other distributions of capital as our Board of Directors may declare out of funds legally available for such payments under Delaware law. Although we have declared cash dividends on shares of our common stock historically, we are not required to do so. In addition to the approval of our Board of Directors, our ability to take certain actions, including our ability to pay dividends, repurchase stock, and make other capital distributions, is dependent upon, among other things, their payment being made in accordance with the capital plan rules and capital adequacy standards of the Federal Reserve Board. Holders of our common stock are entitled to receive only such dividends and other distributions of capital as our Board of Directors may declare out of funds legally available for such payments under Delaware law. Although we have declared cash dividends on shares of our common stock historically, we are not required to do so. In addition to the approval of our Board of Directors, our ability to take certain actions, including our ability to pay dividends, repurchase stock, and make other capital distributions, is dependent upon, among other things, their payment being made in accordance with the capital plan rules and capital adequacy standards of the Federal Reserve Board. On October 19, 2021, we announced that our Board authorized a share repurchase program to repurchase up to 25.0 million shares of the Corporation’s outstanding common stock. The Corporation retains the ability to repurchase when circumstances warrant and applicable regulation permits. The Inflation Reduction Act of 2022, imposes a 1% excise tax on the fair market value of stock repurchases after December 31, 2022. There have been recent proposals to significantly increase this excise tax rate. Any such material increases may impact our future strategies relating to the return of capital to our shareholders, including the size of, or execution against, current or future repurchase programs related to shares of our common stock. On October 19, 2021, we announced that our Board authorized a share repurchase program to repurchase up to 25.0 million shares of the Corporation’s outstanding common stock. The Corporation retains the ability to repurchase when circumstances warrant and applicable regulation permits. The Inflation Reduction Act of 2022, imposes a 1% excise tax on the fair market value of stock repurchases after December 31, 2022. There have been recent proposals to significantly increase this excise tax rate. Any such material increases may impact our future strategies relating to the return of capital to our shareholders, including the size of, or execution against, current or future repurchase programs related to shares of our common stock. 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